Netflix Co-CEOs Ted Sarandos and Greg Peters sought to reassure investors that their game-changing deal with Warner Bros. Discovery won’t become another media business fiasco.
“A lot of those failures that we’ve seen historically is because the company that was doing the acquisition didn’t understand the entertainment business,” Peters said on a conference call with Wall Street analysts Friday. “They didn’t really understand what they were buying. We understand these assets that we’re buying, the things that are critical in Warner Brothers are key businesses that we operate in, and we understand. A lot of times, the acquiring company, it was a legacy non-growth business that was looking for sort of a lifeline. That doesn’t apply to us. We’ve got a healthy, growing business that we’re super, super excited about.”
Warner Bros. itself has been at the center of a number of all-time turkeys, chief among them the 2000 merger of AOL and Time Warner. AT&T’s $85 billion takeover of Time Warner in 2018 also proved a misfire, and in turn led to the 2022 merger with Discovery. The struggles of Warner Bros. Discovery started the process of the company being sold.
Prior to the call, Netflix confirmed it has prevailed over Paramount and Comcast to claim the studios-and-streaming division of Warner Bros. Discovery in an $82.7 billion deal.
The execs were also asked about the timing of the deal, with an analyst noting Peters’ comments earlier this year at a conference that Netflix execs were “builders, not buyers.” Sarandos reasoned, “It wasn’t for sale before. And they certainly hadn’t cleaned up the assets or separated the assets, in the way that they have right now. So I think that kind of goes to the ‘why now.'”
Peters said there was no implication that Netflix needed the deal to paper over deterioration in its core business. “We’re very excited about our organic road situation right now,” Peters said. “We’re doing a great job delivering double digit revenue growth. We’ve got key opportunities for growth in the business. So this isn’t really reacting to any situation.”
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